I was answering a question on stackoverflow.com about N-Tier Design and when I was done I realized I had a great Blog post. so here is the value and reason for doing n-tier design
The data access (sql server, mysql, flat xml files, etc.) all of this should be abstracted away nothing else in your application should care or know how you are getting your data, only that it dose, if anything else knows how you are getting your data you have a layer violation. if the DAL dose anything other then get data you have a layer violation. Next you implement a data access interface something like IDAL that your business layer uses, this is very important for making your code testable by forcing you to separate your layers.
The data entities can be placed in the DAL name space or give them there own, giving them there own forces separation. Data entities are dumb objects and should contain very little to no logic and are only aware of themselves and the data they have, THEY DO NOT CONTAIN BUSINESS LOGIC!, DATA ACCESS LOCIC, OR UI LOGIC. if they do you have a layer violation. The only function of a data entity is to hold data and be passed from one layer to the next.
The Biz layer implements a data access interface like the IDAL we talked about before you can instantiate this with a factory, an IOC container, or all else failing a concrete type, but add a setter property so this can be changed for testing. The Biz Layer Only handles Business logic, it doesn't know or care where the data came from or where it's going, it only cares about manipulating the data to comply with business rules, this would include date validation, filtering (part of this is telling the DAL what data it needs, let the DAL figure out how to get it). Basically the BIZ handles all logic that isn't UI related or Data retrieval related. Just like the DAL the Biz should implement an Interface for the same reason.
The UI layer Accesses the Biz layer the same way the Biz layer accesses the DAL for the same reason. All the UI layer cares about is displaying data and getting data from the user. The IU Layer should not know anything about the business rules, with the possible exception of data validation required to populate the Data Entities.
The advantage of this architecture is it forces separation of concern making it easier to test, more flexible, and easier to maintain. Today you are building a web site but tomorrow you want to allow others to integrate vi a web service, all you have to do is create a web service that implements the IBIZ interface and your done, when you have to fix a bug in the BIZ layer, it's already fixed in both your website and web service.
Taking this to the next step, lets say you are doing a lot of heavy number crunching and you need more powerful servers to handle this so all you have to do is implement an IDal and IBIZ interface are really wrappers to WCF that handles the communication between your servers, now your application is distributed between multiple server and you didn't have to change your code to do it.